Reflections of a Newsosaur

Thursday, February 12, 2015

We’ll miss David Carr more than we know

With the rules of journalism and the media business evolving at Internet speed, David Carr was a savvy, centered and sensitive commentator who teased the facts from the frenzy with warmth, wit and faultless prose. He departed the madcap media beat prematurely when he died tonight at the tender age of 58, collapsing in the newsroom of New York Times. I am sure he was in no hurry to leave his beloved wife and daughters, but you can bet he was proud to die with his boots on. David was a generous friend and colleague, who readily carved time out of his blistering schedule to dope out a story or shoot the breeze over a stack of lemon-curd pancakes. For a skinny guy, he could eat an amazing amount. Last year, I persuaded him to fly across the country for the weekend to give the commencement speech at the Graduate School of Journalism at the University of California at Berkeley.“I am David Carr and I am an alcoholic,” he said in opening a humorously serious and seriously humorous talk (video below) that delighted and inspired the graduates, my colleagues and the assembled families. He even dropped the f-bomb a couple of times, a word that normally doesn’t come up at graduation ceremonies.But that’s who he was. Silly, smart, sincere, self-effacing and selfless. And he knew how to tell a story. With journalism imperiled these days at home and abroad, we need the likes of David on the beat more than ever. Now, we have lost him. Without David on the job, it is hard to know what we won’t know. But I am sure it will be a lot. What the f-bomb are we going to do?

Welcome to ‘Everyware’ computing

Our imaginative friends in the technology industry intend to make computing simpler and arguably more satisfying by making it more intuitive than ever. Here’s how: They will saturate our environment with vast arrays of computers and Internet-enabled sensors that will put all but the most technologically isolated individuals in a crossfire of constant monitoring, constant profiling, constant push notifications and constant behavioral analysis – so the process can be fine-tuned and repeated over and over again. The phenomenon is known variously as Ambient Computing, Pervasive Computing, Ubiquitous Computing or – my personal favorite – Everyware. So, let’s go with that. Everyware indeed may simplify our relationship with technology. Or it might snarl the wires of our wired lives even further. There are too many moving parts (as discussed in a moment) to predict exactly how Everyware will affect our personal lives and business.

But ubiquitous computing seems likely to have major impact on the media business, because it will all but eliminate the intermediary relationship that media companies require to build the audiences they traditionally have sold to advertisers. Assuming Everyware materializes as envisioned by Silicon Valley’s savants, it spontaneously will deliver targeted information and entertainment, while at the same time enabling marketers to maintain persistent, direct and dynamic one-to-one relationships with individual consumers. In that event, what roles will be left to gate-keeping editors and the media companies that employ them? Publishers and broadcasters need to start focusing on this, so here are the trends to watch: :: Mobile Computing. From headlines to selfies to shopping, smartphones and tablets have become indispensible vehicles for delivering intimate and individualized computing experiences. And people love them. The average American spends just under three hours a day consuming mobile media, according to eMarketer.Com. Back in 2010, mobile use was 24 minutes a day. :: Wearable Devices. Although the Google Glass project seems to have lost some of its gloss, companies like Apple, Lumo Body Tech and Ralph Lauren are working on a variety of wearable, sensor-rich products that respectively pinpoint your location, check your posture and monitor your heart rate. Although no one is certain how wearables will be used and which will emerge as winners, various industry forecasters reckon that sales in this emerging market will grow from near insignificance today to between $20 billion and $50 billion by 2018 (see slide 8 here). :: Internet of Things. The Nest thermostat is perhaps the best-known example of an Internet-connected device that matches your environment to your behavior to ensure comfort and energy efficiency. But a host of increasingly sophisticated in-home utilities are being rushed to market, as exemplified by Echo, a voice-activated ambient device from Amazon that searches the web, plays music and, naturally, helps you shop. Forrester Research predicts that the number of smart sensors in homes, businesses and vehicles will leap eightfold to 25 billion units by 2020. That’s a lot of smart Crock-Pots. :: Cloud Computing. Thanks to intense competition among Amazon, Microsoft, Google and other heavy hitters seeking to outsource computing for clients of every size, the costs of storing and crunching data will continue diving for the foreseeable future. The frenetic growth of cloud computing will lead to a fourfold increase to 6.5 zetabytes of the amount of data stored around the world by 2018, according to Cisco Systems. Read on to see how it will be used: :: Hyper-Personalization. The Big Data archived in the cloud contains all the bits and pieces of information captured about you through the above means, including but not limited to age, gender, residence, income, credit rating, family status, reading habits, commuting routines, social networks and shopping patterns. Depending how generously you share information on the web and how avidly you participate in frequent-shopper programs, the enduring and growing volume of information about you can be quite personal and granular, ranging from your preferred toothpaste to your demonstrated driving efficiency to your inferred sexual proclivities. :: Digital Advertising. To put the right offer in front of the right person in the right place at the right time, marketers aggressively are shifting their expenditures to the digital media, because you can’t achieve the same precision, efficiency and immediacy with print or broadcast advertising. By 2019, the sums spent on digital marketing will double to more than $100 billion from today’s level, according to Gartner Research. Digital ad spending surged 17% in 2013 to a record $42.8 billion, topping the sums spent on television for the first time, according to the Internet Advertising Bureau. The trade group said digital ad spending grew another 15% in the first half of 2014, so this looks like a durable trend. Although the ambient-computing environment is fluid and complex, the mounting array of evidence suggests that Everyware could change Everything for the media and advertising businesses. Now is the time to start paying attention.

Tuesday, January 13, 2015

Historic mobile ad surge threatens print

If you compare the modest amount of time that consumers read newspapers with the billions in advertising dollars spent on the medium, you will see that newspapers long have captured far more than their fair share of the advertising pie. But this could begin unraveling with a vengeance in 2015, as mobile advertising surges to record levels. As discussed in a moment, mobile advertising expenditures exploded by 76% in the first half of 2014 to $5.3 billion, surpassing even the sum spent on banners. Meanwhile, a chilling survey of advertising executives shows that 41% of them plan to fund their expanding mobile advertising budgets in 2015 by reducing print expenditures. In other words, mobile’s gain could prove to be a further setback to publishers who already have seen their advertising revenues decline by more than half since peaking at $49.4 billion in 2005. Here’s why publishers should be worried:The disproportionate share of dollars spent on newspaper advertising is illustrated in a simple analysis put together recently by eMarketer, an independent analytics firm. By dividing the amount of advertising dollars spent on print by the number of minutes the average American spends with the medium, eMarketer found that advertisers in 2014 spent 83 cents per minute to reach print readers and only 7 cents a minute pursuing mobile users.

Inasmuch as markets abhor this sort of inefficiency, it is axiomatic to conclude that advertisers will begin to vector ever more of their dollars from print, where the average American adult spends a combined 26 minutes a day with newspapers and magazines, to smartphones and tablets, where the average use is 2 hours and 51 minutes a day. Over the years, it should be noted, mobile use has increased at a break-neck pace, rising to the current level from less than half an hour daily in 2009. In the same period, combined newspaper and magazine readership slipped from 50 minutes a day to 26, according to eMarketer.With consumers spending ever more of their time on mobile devices, it makes sense that advertisers are spending more of their money on mobile media. In the first half of 2014, mobile ad expenditures increased 76% over the prior year to $5.3 billion, according to the Internet Advertising Bureau, a trade group. The IAB reported that the mobile growth rate was five times greater than the 15% gain in advertising across all digital categories. Digital ad statistics for all of 2014 will not be available until later this year, but here is what we know now: If the digital advertising market expanded as rapidly in the second half of 2014 as it did in the first, then full-year mobile sales for the year would be $12.5 billion. Assuming the over-all digital advertising market grew as much in the second half of 2014 as it did in the first half, then mobile would have represented fully a quarter of the $49.3 billion in ad sales the industry was on track to produce in 2014. To put this in perspective, mobile advertising has rocketed from insignificance in 2010 to being second only today to desktop search advertising, which represents about 38% of total digital ad volume. As for the future, PricewaterhouseCoopers projects that worldwide mobile advertising will increase by some 25% in 2015, while Magna Global forecasts a 64% gain. Either way, it is a lot. Thanks in equal parts to inertia on the part of marketers and to able salesmanship on the part of the newspapers and magazines, publishers long have garnered more than their fair share of advertising dollars. After all, it is easier for advertisers to buy tens of thousands of dollars in print advertising than to place, monitor and analyze the performance of tens of thousands of digital ads. And it certainly is more fun attending a basketball game with a congenial ad rep than crunching numbers on a Google Ads spreadsheet. But the powerful shift to mobile advertising could change things precipitously. Here’s why:After interviewing some 300 senior managers at consumer brands and advertising agencies, a consulting group called Advertiser Perceptions found that 41% of the respondents plan to boost their mobile ad budgets in 2015 by reducing the sums they spend on print. In addition to trimming print, 34% of the marketers said they would cut television spending and 32% said they would reduce traditional digital display advertising. The study found that 83% of the marketers plan to shift to mobile because they believe the intimacy and immediacy of handheld devices will enable them to have more individualized and instantaneous relationships with their customers than ever before. With “more and more people using mobile,” said one marketer quoted anonymously in the report, “we are moving our ad spend…so we can reach users via the devices they currently are using to access content.” It’s axiomatic.

Wednesday, January 07, 2015

#JeSuisCharlie

Monday, December 15, 2014

UC-Berkeley seeks international journalists

Applications are being accepted through Jan. 5 for a unique program providing mid-career journalists from outside the U.S. with an opportunity to pursue advanced professional training and academic study at the Graduate School of Journalism at the University of California at Berkeley.

In the non-degree Visiting Scholar program, participants can audit courses offered at the journalism school and in other disciplines, drawing upon the extensive resources and community life of a major research university. Disclosure: I am the director of the program.

A former visiting scholar was recruited after completing the program by one of the Europe's biggest publishers to be editor in chief of a successful print magazine as it transitions to the digital era. "I feel I am in the middle of a change in the media industry and that I'm actually in charge now," she wrote after assuming her new position. "The information and new ideas I got [at Berkeley] have been absolutely priceless."

Another former visiting scholar started her own long-form online magazine after returning home, which already has begun winning journalism prizes and generating revenues through subscriptions and eBooks. "I really never before had been forced to think about how to make a profit with journalism," she said. "Your program was the reason I was brave enough to think of something new."

Journalists accepted to the program can participate for either the entire 2014-2015 academic year or for a single semester of their choice. Information about the program, including fees and application requirements, is here. The deadline for applications is Jan. 5, 2015.

Thursday, December 11, 2014

How newspapers lost the Millennials

American publishers and editors have only themselves to blame for failing to connect with the Millennial generation that they – and most of their advertisers – covet the most. The inability of newspapers to resonate with digital natives has left them with a daunting demographic challenge. Two-thirds of the audience at the typical newspaper is composed of people over the age of 55, according to Greg Harmon of Borrell Associates. “The newspaper audience ages another year every year,” he adds. “Everyone’s hair ought to be on fire.” As the newspaper audience grays, the readers that newspapers – and most of their advertisers – would like to have are, instead, busily racking up page views at places like BuzzFeed, Circa, Mic, Upworthy, Vice, Vocative and Vox.

To delve into the demographic disparity, I pulled the audience data on Mic.Com, which comScore calls the favorite news destination for individuals from the ages of 18 to 34. Although many publishers and editors never may have heard of Mic, comScore says it is visited by a thumping 60% of Millenials. To make things interesting, I compared Mic’s audience with the aggregate data for the 28 geographically dispersed markets served by McClatchy Co., the largest newspaper company furnishing user data to Quantcast.Com, which requires publishers to opt in to its data service. Quantcast indexes audiences against the national population to make it possible to compare the demographics of one website against another. This means a site whose audience perfectly mirrors the national age distribution would index at 100. Now, here’s how Mic compares with McClatchy, according to Quantcast’s data:At Mic, users from 18 to 24 index at 156, meaning that the site has 1½ times more readers in this age group than the national average. The index climbs to 171 for the 25-34 crowd.The story is quite the opposite at McClatchy, where the under-34 age groups come in at less than 100 but where the incidence of older readers is above the norm, indexing at 108 for 35-44, 117 for 45-54, 126 for 55-64 and 125 for 65-plus. Assuming McClatchy is representative of the industry – and I see no reason why it wouldn’t be – the big question is how so many highly intelligent and highly motivated newspaper executives failed to connect with this massive and influential market. Here’s a not-so-subtle clue: In a recent study, researchers at the University of Missouri reported that only 29% of newspaper publishers conducted focus groups prior to putting paywalls around the digital products that most profess to be the future of their franchises. Instead of talking with their intended consumers, fully 85% of respondents to the survey said they asked other publishers what they thought about erecting barriers around the content that they had been freely providing for the better part of two decades. While paywalls boosted revenues at most newspapers because they were accompanied by stiff increases in print subscription rates, the tactic gave the growing population of digital natives – and non-readers of every other age – the best reason yet for not engaging with newspapers. Of course, newspapers were losing Millenials well before they started feverishly erecting paywalls in the last few years. But what if publishers and editors had begun studying the needs and attitudes of the emerging generation from the early days of the Millenium? Could the outcomes have been more positive? In the interests of tuning into the thinking of those elusive twenty- and thirty-somethings, a newspaper client recently brought a panel of them to a strategy session. Here is what we learned: :: The Millenials said the only media that matter to them are the social media, where they get current news about their friends, as well as cues to other interesting or relevant content. :: They put a great deal of trust in recommendations from their friends but are not motivated by loyalty to media brands. :: They will click on whatever content interests or amuses them, and they make no distinction among news, entertainment and advertising. :: They prefer graphic content – images, videos, GIFs, infographics, etc. – over text.:: They will buy a book, vinyl record or other physical artifact that they view as a collectible, but see no value in paying for access to ephemeral headlines that are freely available everywhere. :: They are turned off by the dispassionate voice that characterizes conventional media, preferring treatments that evoke an emotional response. :: They are smart, engaged and want juicy articles that take stands on important topics. :: They will exercise the full power of choice made possible by their always-on mobile devices. :: They are decisive. If they don’t like the content they are getting, they will make their own. Given the above, it is easy to see that publishers and editors have a higher regard for their products than the next-gen consumers they need to attract. Now, the only question remaining is whether newspaper folk have the gumption – and time – to turn things around.

Friday, December 05, 2014

USA Weekend shuts as costs spike and ads tumble

USA Weekend, the second-largest Sunday newspaper magazine in the United States, will print its final edition on Dec. 28, succumbing to soaring distribution costs and plunging advertising. The circulation of the Sunday supplement, which was stuffed into newspapers delivered to as many as 70 million homes a few years back, has fallen today to about 18 million, according to a knowledgeable source at Gannett Inc., the parent of the publication. With advertising sales collapsing by nearly half in the last few years, USA Weekend was expected to produce about $40 million in revenue in 2014, yielding losses in excess of $10 million in each of the last two years, according to the source, who declined to be identified because s/he is not authorized to speak with the press. Some 30 advertising and editorial staffers will lose their jobs in the shutdown. The demise of USA Weekend will leave the contracting Sunday supplement market to Parade Magazine, whose distribution is about 32 million copies. A few years back, its circulation was double that size, according to industry sources. Financial information is not available for Parade because it is privately held. However, industry sources say revenues today are in the neighborhood of $60 million, as compared with $100 million in the last two or three years. Parade was sold in the fall to Athlon Media by Advance Publications, which had owned the title since 1976. The once-robust Sunday supplement business unraveled as the result of the declining economics of newspaper publishing and the changing demands of advertisers. In the heyday of newspapers – when industry-wide revenues and profits were approximately twice as large as they are today – the publishers of USA Weekend and Parade were able to charge local publishers for the right to distribute the magazines in their Sunday papers. When newspaper advertising began the slide that has taken it today to less than half of the record $49 billion achieved in 2005, the Sunday supplement publishers found themselves first absorbing the costs of shipping the product to local newspapers and eventually paying local publishers to distribute their magazines. The flip in the distribution model not only eliminated tens of millions of dollars of annual revenues for the Sunday supplements but also burdened them with tens of millions in new costs. “The cost structure got crazy,” said an executive who tried to turn around the decline at USA Weekend. “You could afford to pay people to take the magazine if you had enough advertising but this doesn’t work if you don’t.”The demand for advertising in Sunday supplements collapsed because most national advertisers are not willing to purchase space in publications that require copy to be submitted weeks in advance. “Advertising in print is soft, anyway,” said the executive. “When you can sell it, you get the copy days before the paper is printed. It is almost impossible to get people to commit a month ahead.” The demise of USA Weekend will punch a hole in the budgets of publishers who were being paid to distribute the supplement. Because the payments are based on the circulation of the participating publisher, metro papers that formerly carried USA Weekend instantly will lose as much as hundreds of thousands of dollars in annual revenues.With the losses at USA Weekend soon to be stanched, Gannett plans to step up the distribution of content and advertising in the USA Today-branded sections it has been supplying to its network of more than 80 daily papers. The modular sections, which are edited by a small team of editors at USA Today near the nation’s capital, are being credited internally at Gannett with producing $20 million in additional circulation revenues for the company’s dailies. This has been made possible, said a corporate source, because the daily USA Today supplements have cut churn and enabled local publishers to increase circulation fees. Building on the momentum the daily sections have achieved, Gannett plans a major ad-sales push in 2015. While the USA Today supplements to date have been available only to Gannett-owned papers, the company has begun a pilot program to offer USA Today pages to non-affiliated papers. The executive said s/he believes the real-time delivery of daily USA Today supplements will please both cost-conscious publishers and modern readers. The delivery of fresh daily content “can produce a more relevant product that can succeed without even selling more advertising,” said the executive. “The months-old articles we used to put in the Sunday supplement don’t have the same value for readers any more.”

Thursday, November 20, 2014

Digital nabs 77% of classified sales, says study

More than three-quarters of the global classified marketplace formerly dominated by print has moved to the digital media, according to an ambitious new study from a consulting firm. In the first known effort to produce a bottoms-up estimate of the scope of the global classified business, the Advanced Interactive Media Group said the digital media are capturing $56.8 billion of the $92.1 billion in classified revenues being generated this year. That means 77% of the dollars generated in the classified marketplace have forsaken print for web and mobile platforms. Classified revenues include not only the fees traditionally charged to place want-ads but also banner advertising sold on free classified sites and revenue shares collected by sites like AirBNB.Com. The shift from print to digital remarkably similar across the world, according to the study. As illustrated in the table below, the digital media this year are capturing 77% of the $31.6 billion in classified revenues in the United States. The percentages are nearly identical in three of the next four largest classified markets: China, the United Kingdom and Germany. The only outlier is Brazil, where the AIM Group says 90% of classified sales are digital. (The study is available here for $1,795.)The migration of classified advertising away from print is a major reason why the revenues of the U.S. newspaper industry plunged from $57.4 billion in 2003 to $37.6 billion in 2013 (further details here). With nearly all publicly held newspaper publishers reporting revenue declines throughout this year, the industry’s sales are headed even lower in 2014. To put the significance of classified advertising at newspapers in perspective, consider this: As recently as 2000, want-ads for cars, apartments, jobs, sofas and puppies produced $19.6 billion in sales for newspapers, representing 40% of their advertising revenues, according to the Newspaper Association of America. In 2013, the industry collectively sold $4.1 billion in classifieds, which came to less than 18% of its diminished ad base. The 78.8% drop in this key revenue category for newspapers occurred because consumers and advertisers alike have embraced the convenience, targetability and efficiency of digital classified environments, which offer comprehensive, easily searchable and low- or no-price listings. Digital publishing has enabled whole new categories of classified verticals that were unthinkable in the age of print, said Peter Zollman, the founder of AIM Group (formerly known as Classified Intelligence). In addition to specialized sites where you can hunt for homes, cars and jobs, the digital media offer marketplaces ranging from free stuff at Craigslist.Com to vacation rentals at AirBNB to a job site for anesthesiologists called GasWorks.Com. Advertisers are particularly jazzed about the low cost of digital classified advertising, as compared with the hundreds of dollars newspapers used to charge for three lines of agate type to fill a secretarial position or hire a car salesman. “Digital classifieds are priced much lower than the equivalent before digital,” said Zollman in an email. “And many millions of ads are posted every day for free, with sites making their money on upsells, adjacent banner ads, sales of Big Data and lots of other revenue streams.”Thanks to the economies of do-it-yourself ad creation and the scale enabled by digital publishing, even free sites can produce eye-popping profits. In a research report earlier this year, Zollman estimated that Craigslist, which most people think of as being free, will generate some $335 million in revenue this year with pre-tax profits north of 80%. The site, which employs only about 40 individuals, charges for recruitment and real estate in certain markets (though they are free in others) and also requires auto dealers to pay $5 for every vehicle that they list. By turning classifieds into an attractive form of user-generated content, digital sites have created a win-win proposition for consumers and advertisers. The only losers are the newspapers, which concentrated on preserving the high-price ads that once produced such rich, reliable and profitable revenue streams for them. As but one example of publishers failing to wise up the ways of the web, the Boston Globe in the 1990s turned down an opportunity to invest in the nascent Monster.Com because its managers didn't want low-priced web advertising to cannibalize their lucrative print recruitment business.

Wednesday, November 12, 2014

New rules for mobile journalism

Although mobile publishing is quickly changing the rules of journalism, newspapers have been dangerously slow to adapt. This has got to be fixed, because digital natives like BuzzFeed, Circa, Mic, Upworthy, Vice, Vocative and Vox are competing for – and in many cases winning over – the youthful readers coveted by publishers and advertisers. As discussed previously here, nearly half of the digital page views at many newspapers are occurring on mobile devices. But editors and publishers have been slow to recognize that mobile publishing is as different from print-to-web publishing as television is from cave drawings. Constrained screen real estate – like the new 1.5-inch Apple Watch – isn’t the only factor influencing the development of content for mobile devices. An even bigger issue is the limited amount of time that publishers can engage with readers.

Although consumers spend an average of 2½ hours a day poking at their smartphones, research shows that the time typically is divided into 150 sessions per day. This makes for an average session time of less than half a minute to snag someone’s attention amid a dynamically expanding list of activities that includes, but is not limited to, checking messages, making phone calls, consulting calendars, surfing the web, managing stock portfolios, monitoring the weather, playing games, updating Facebook, swapping selfies, shopping for shoes, buying movie tickets, choosing music and, as time permits, catching up on the news.In other words, mobile publishing is the antithesis of traditional journalism, which favors deliberation and depth over the speed and sass characterizing the top mobile sites. So, yes, mobile publishing poses a vexing array of contradictions for journalists to debate and resolve. In the interests of encouraging newspapers to build competitive mobile sites, here’s a listicle to guide the way: :: Reporting Digital deadlines are relentless, requiring journalists to publish as fast as possible – even when all the facts are not in. While some web natives are notoriously slipshod about confirming information, the continuing credibility of newspapers means they can’t publish first and ask questions later. The new “Watching” feature on the New York Times website helps solve the fast vs. fact dilemma by letting the reader watch the news unfold in real time with continuously updated staff, eyewitness and third-party reporting. Live feeds (including video, where possible), work equally well for both breaking stories and such scheduled events as the State of the Union address. :: Presentation The limited real estate on mobile devices means stories need to be conveyed as concisely as possible, preferably with images, charts, maps and other visual cues enabling instant comprehension with a minimum of words. BuzzFeed offers a smorgasbord of carefully curated teasers on every page. Circa breaks the news into tersely written, bite-sized text blocks that eschew lengthy background. Vice.Com produced a chilling video that showed more about the Islamic State than all the billions of words that have been written about it. :: Analysis Even though the terse presentation required by mobile media leads to atomized info-bits, readers also appreciate presentations that connect the myriad dots in a story. To explain complex events like the turmoil in the Middle East, Vocativ offers graphic flashcards. Vox does the same thing with richly annotated maps. :: Voice The snarky mien cultivated by many of the digital leaders poses perhaps the biggest challenge to traditional journalists trained in “just the facts, ma’am” writing. While proper journalism requires scrupulous research, careful fact checking and balanced presentation, the neutral tone typically associated with traditional news writing suffers in comparison with the lively language widely employed on the web. The solution is to add as much sizzle as possible to the steak. In a classic example of how to do this, Forbes.Com wrote a piece about a terrific New York Times story titled “How Companies Learn Your Secrets” but topped it with this far-grabbier headline: “How Target Figured Out a Teen Girl Was Pregnant Before Her Father Did.” :: Sharing Digital news is a participatory sport, especially when consumed on mobile devices. Users want to upload videos, participate in polls, offer comments, author reviews, and more. Smart digital publishers not only make it easy to contribute to their sites but also make it a snap to share links via Facebook, Twitter, Pinterest, email and other platforms. The relaunched Los Angeles Times website drops ready-made tweets in the body of its stories, so visitors can point, click and tweet. Bleacher Report not only promotes comments but also publishes metrics for each story, so readers (and contributors) know how popular they are. None of the above is meant to suggest that newspapers dumb down their reporting. On the contrary, serious journalists need to get serious about making smarter decisions about the stories they cover – and the way they tell them – because the move to mobile is too important to miss.

Monday, November 10, 2014

Digital clinches control of local auto ads

The digital domination of local automotive advertising will be complete in 2015, usurping one of the most valuable revenue streams ever enjoyed by newspapers and broadcasters. In a stunning, technology-driven shift of market power in just half a dozen years, the digital media will claim two-thirds of the $22.7 billion spent on local advertising by auto dealers in 2015, according to Borrell Associates (report here for $995). As illustrated in the chart below, digital surged from less than 5% of auto dealer spending in 2000 to capture 50% of the local auto market in 2013, according to annual surveys conducted by the National Association of Auto Dealers, a trade group. If Borrell’s projections are correct, the digital media will capture 57% of this major advertising category this year and clinch control in 2015. Here’s why this is a big deal: At some $33 billion a year in expenditures, autos trail only retailing as the second biggest advertising category in the United States. Two-thirds of the spending is at the local level, under the direction of individual dealerships and regional marketing associations. Given the changes in consumer behavior discussed below, the legacy media now appear to be all but shut out of a rich revenue stream they owned a few short years ago. Here are the details: :: Newspapers – When the Internet was coming of age in 2000, newspapers led auto advertising with 52% of the dollars spent by local dealers, according to NADA. By 2013, the market share for publishers fell to 18%. Borrell, an independent consulting company, predicts the newspaper share of the local auto ad market will tumble to 9% in 2015. :: Radio – Second only to newspapers at the beginning of the millennium, radio sold 18% of the local auto ads in 2000 but shriveled to 3% by 2013, according to NADA. With this once-robust category almost wiped out, Borrell forecasts that the radio industry’s ad share will stay about the same in 2015. :: Television – Local stations captured 16% of the dealer spend in 2000 and held on to 13% of the market in 2013, according to NADA. But Borrell believes the industry’s share will tumble to 9% in 2015. To put the magnitude of the decline into dollars and cents, annual automotive classified revenues at newspapers topped $5 billion as recently as 2004 but were barely $1 billion when the Newspaper Association of America stopped reporting on the category in 2012. Industry advertising sales have declined unremittingly since then, so the number today undoubtedly is lower. We just don’t know how low. Segmented historical data are not available for radio, but it’s safe to assume that the loss of local auto advertising contributed to the decline in the industry’s revenues from some $20 billion in 2004 to approximately $15 billion today. Because TV to date has clung to most of its auto advertising, the revenue loss has not been as significant as it has been for newspapers and radio. If Borrell’s forecast for 2015 is correct, then TV stations may begin feeling some pain in the near future. The digital takeover of the car advertising market occurred as the auto industry climbed out of the deep sales slump that occurred in the Great Recession. Sliding from 16 million units in 2007, auto sales bottomed out at 10 million units in 2009, according to NADA. This year, Borrell predicts, the industry will return to pre-Recession levels by selling more than 16 million vehicles. In 2007, the NADA reports, dealers spent 17% of their budgets on digital media, with the lion’s share of media buys still going to newspapers and broadcasters. The big shift to digital advertising came when digital’s share surged abruptly from 25% of the market in 2011 to 43% of the market in the very the next year. Momentum has been building ever since. The simple reason dealers abandoned their traditional media partners is that they are following their customers, who increasingly are using the web and mobile media to shop for cars. In a recent white paper, NADA reported::: J.D. Powers, the market researcher, found that 80% of new vehicle shoppers consulted the web before buying a car. :: A Polk/AutoTrader survey found that new- and used-car buyers spent respectively 10 hours and 11¾ hours researching vehicles online before contacting a dealer. Interactive sites give car buyers an advantage they could only dream about in the pre-Internet era. With no salesmen breathing down their necks, shoppers can systematically and objectively research competing brands, selecting their ideal models, colors and trim groups. They then can conveniently search dealer inventories to locate the exact car they want. And, best of all, they can level the playing field in negotiations by learning in advance the prevailing price for the vehicle. With consumers typically visiting no more than two dealerships before settling on a purchase, dealers know they have to intercept prospects early, often and effectively as they move through the digital buying process. Because dealers know that free hot dogs and pony rides don’t sell cars like they used to, you can count on them to divert ever more of their advertising dollars to the digital media. At least until something better comes along.

Thursday, October 09, 2014

Mobile news consumption hits the tipping point

The proportion of mobile visits at digital newspaper sites has doubled in the last two years to the point that half the visitors at some publications today are arriving via smartphone or tablet. The rapid uptake in mobile news consumption represents a tipping point that could be as disruptive a paradigm shift for newspapers as the move from print to pixels. Here’s why the shift has historical resonance: Even though the Internet burst into the public consciousness in the mid-1990s, it wasn’t until the mid-200os that half of U.S. homes subscribed to relatively cheap and reliable broadband service, which encouraged folks to take an active role in getting and giving the news. In the 10 years since broadband became commonplace, weekday print circulation has tumbled by 47% and newspaper ad sales dropped by 55% (details).

Now that mobile traffic is at or near 50% at many newspapers, editors and publishers need to put ever more of their thinking – and resources – into optimizing products, content and advertising for not only smartphones and tablets but also for such emerging devices as smart watches, smart televisions and whatever smart stuff comes next. As discussed below, mobile publishing is as distinct from web publishing as web publishing is from web printing. Here’s how fast things are happening: After crunching data covering 213 sites operated by five major newspaper groups, I found that the average number of unique visitors accessing the sites from mobile media doubled to 43% in mid-2014 from 21% in mid-2012. At the same time, the number of page views consumed on mobile media nearly tripled to 28% this year from 11% in 2012. The data, which were obtained from Quantcast.Com, covered the interactive sites operated by Advance Publications, GateHouse Media, Hearst, McClatchy Co. and MediaNews Group. Because publishers have to willingly expose their detailed data to Quantcast, comparable statistics were not available from such publications as USA Today, the Wall Street Journal, the New York Times, the Los Angeles Times or the Washington Post – which, because of their global audiences, probably get more than the average share of mobile traffic. Even though my survey is not as comprehensive as we would like, the Quantcast data nonetheless cover about 15% of the nation’s dailies in a sample that is diversified by both geography and market size. In spot-checking the performance of individual publications covered in the survey, I found great disparity among them. While only 31% of unique visitors at McClatchy’s daily in Bellingham, WA, came from mobile users, fully 50% of the traffic at company's Miami Herald arrived on mobile devices. As suggested by the above example, mobile use tended to be higher at larger papers than at smaller ones. Thus, the average mobile visits are 34% at the small and medium dailies operated by GateHouse vs. 50% at the MediaNews division of Digital First Media, which operates several large properties and has pledged to migrate more vigorously away from print than most publishers. The power of corporate emphasis on digital publishing is illustrated dramatically at NOLA.Com, the digital incarnation of the New Orleans Times-Picayune, where Advance Publications famously pivoted away from daily home delivery. After the T-P scrapped seven-day delivery in the fall of 2012, the number of unique visitors at NOLA reported by Quantcast rose some 1.5 times to nearly 4 million by mid-2014. In the same interval, the share of mobile traffic at the site climbed to 56% of uniques in mid-2014 from 36% in the summer before daily printing ceased. Assuming you agree that mobile is the Next Big Thing, here’s how to think about this new publishing paradigm: Make It Timely – Some studies suggest that mobile users consult their phones as often as 15o times a day to catch up on the latest news of their friends and the world. With itchy-fingered users snacking all day long, articles have to be up to date and frequently updated – even as a story is developing. Make It Concise – Snackers want information to be short and entertaining. Pictures, graphs, videos, maps and other non-verbal content should take precedence over long, gray slabs of type. To the degree the subject matter is appropriate, users want to be entertained, as well as informed. So, bring on the snark and sass. Make It Viral – Interactive media work best when users can, duh, inter-act with each other by uploading content, contributing comments and – best of all for audience-hungry publishers – share interesting articles with their friends. Upworthy, BuzzFeed and Huffington Post have made a science of encouraging pass-along readership. News media have to do it, too. Make It Transactional – Provide useful tips, clicks and other cues to pay back the reader by enriching her experience. This specifically includes well-crafted and well-targeted advertising or other commercial content. Relevant advertising is just as welcome to most digital consumers as anything else. Make It Mobile – Or you may not make it all.

Wednesday, September 10, 2014

Why do Sunday newspapers cost so much?

As I picked up the Sunday New York Times at a Starbucks in a leafy neighborhood in Chicago, the twenty-something woman behind the counter started to ring up $2.99, the going rate for the Sunday Chicago Tribune.

“Actually,” I said, “it’s $6.”

“It is?” she said incredulously.

“Yeah,” said the youthful male colleague beside her. “Why would anyone spend that kind of money for a newspaper?”

“Well, the Sunday paper has lots of special sections that you don’t get during the week, like a magazine, book reviews and travel,” I said. “And lots of people buy the Sunday paper for the coupons and the ads” – even though I knew my NYT would contain no local classifieds or Best Buy circulars.

“I guess so,” said the young man. “I have looked at the paper at my grandparents’ house a couple of times, but I still don’t see why anyone would spend that kind of money on a newspaper.”

This mini focus group gave me lots to think about as I walked back to my sister-in-law’s house.

First and foremost was the question of how newspaper publishers could sell the value of their truly valuable products to the sub-geezer set.With studies consistently showing that two-thirds of the print audience is over the age of 55, newspapers clearly aren’t making the grade with twenty-somethings, thirty-somethings and even most forty-somethings.

Second and equally vexing was the question raised by the Starbucks lad: Why are Sunday papers so ridiculously expensive?

And then it hit me: The answer to both questions is to drastically drop the price of Sunday papers in order to remove price as the formidable barrier that it represents to first-time, fallen-away and wavering readers.

Whether they argue that newspapers cost too much or that they don’t have time to read them, people who don’t buy newspapers are really saying that papers are more expensive than they are worth.Consumers daunted by weekday editions priced at $1 – or more – are hopelessly repelled by Sunday products costing twice as much, if not more.

There is a better way.

If publishers reduced the steep prices of their Sunday products, they could attract new and former customers to boost circulation on the day of the week that typically delivers half of their advertising revenues and often more than half of their profits. To offset the decline in circulation revenue, increased Sunday readership ought to attract more advertising.

Although publishers may argue that Sunday newspapers are premium products deserving of premium pricing, they need to face the fact that a growing number of consumers don’t agree with them.

After analyzing a random sample of the nation’s daily newspapers between 2004 and 2014, I found that the industry’s print circulation has dropped precipitously in the last decade.

Total weekday sales among the nation’s 1,300-plus newspapers plunged 47% in the decade to a daily average of approximately 29.1 million as of March of this year, according to data from the Alliance for Audited Media. Aggregate Sunday circulation in the same period dropped 40% to a weekly average of approximately 34.7 million.

Thus, only a quarter of the nation’s 115.2 million households today consume a weekday paper and only 30% of households take Sunday papers.

With more than two-thirds of the nation’s families not consuming newspapers, there is considerable upside for publishers who do a better job of conveying the value proposition of their products.

Of all the audience-building options at their disposal, cheaper pricing for quality Sunday papers would be the best bet. Here’s why:

From special sections to comics to op-ed columns, the content in the Sunday paper is more comprehensive, and therefore more compelling to read, than any other edition of the week.Because Sunday papers carry more advertising and coupons than any other day, the typical edition has the potential to pay for itself many times over. Since it is published on the day that many people get a break from their ordinary routines, the Sunday paper represents the greatest opportunity to command attention on a day that Mom isn’t rushing off to work and Dad isn’t hustling the kids to school.

Although the Sunday paper ought be the gateway to attracting new readers – as well as keeping existing ones – most publishers price the product so aggressively that they turn off all but their aging core readers.

Markets support premium pricing when demand is high and supplies are low.With an abundance of news, information, entertainment and advertising available through the free or exceedingly cheap digital media, consumers today have many more choices than in 1993, when the Internet was a whippersnapper and average Sunday circulation peaked at 62.6 million.

If publishers want to sustain the biggest and most profitable revenue source that they have, they need to get real about the pricing of their Sunday products.

Monday, September 08, 2014

Get ready for mobile payments

Although wide-screen iPhones and curvy iWatches have gained the most attention as the buzz builds around Apple’s product announcement on Tuesday, the biggest game changer of all may be the company’s effort to launch a mobile payments system. Assuming the chatter is correct, Apple will seek to supplant credit cards with a wireless payment system embedded in its next-gen gizmos, thus revolutionizing the way consumers pay for things – and merchants track their customers. It is widely reported in the press that American Express, MasterCard and Visa have agreed to join the Apple initiative. If mobile payments take off as Apple and its putative partners hope, this frictionless new way of transacting business will disintermediate the media as never before, as discussed in the following Newsosaur post from Aug. 9, 2011. There are a couple of updates to the archived post. :: The Isis payment network mentioned in the original article, which was developed by AT&T, Verizon and T-Mobile, announced last week that it is changing its name to Softcard to avoid being confused with the group beheading journalists and terrorizing the Middle East. Also, the planned AT&T and T-Mobile merger was abandoned after it was blocked by federal antitrust regulators. :: The Blippy.Com service mentioned in the original article has gone on to other pursuits, but a number of other social shopping sites are only too happy to learn about who you are and what you like. Further, as previously discussed here, all of the major retailers have apps that track you, your purchases and even your location in their stores. Now, here’s the original post: It’s not a matter of if, but when, your ever-smarter smart phone replaces currency and credit cards as the way you pay for everything from a latte to a load of lumber for the deck you have been meaning to build.

The arrival of mobile payments will restructure the way marketers interact with consumers, leading potentially to epic shifts in the balance of power and dollars from financial services like Visa and American Express to technology providers like Google and Verizon.

It also is almost certain to lead to further disruption for media companies, unless they can figure out a way to nose into the action – which already is well under way.

The mobile payments revolution will be enabled by a technology called Near Field Communications (or NFC), which adds a micro-range radio to the cellular, wifi and Bluetooth arrays already packed into every smart phone. (More on NFC here.)

While only a smattering of Android devices today are equipped with NFC, there are hopeful rumors in the ever-breathless Apple press that the next-generation iPhone will have the feature when it debuts later this year.

Whether Apple takes the plunge now or later – thus leveraging the 125 million credit cards already on file at its successful iTunes service – the company will join a frenzied land grab including the following players:

:: Google Wallet, which will be seamlessly integrated with the Android operating system that ComScore says powers more smart phones (40% of the market) than its closest competitor, the iPhone (27% of smart phones).

:: Isis, a collaboration among Verizon, AT&T and T-Mobile (the latter of which AT&T is seeking regulatory approval to acquire). These mobile providers, who utterly dominate the U.S. market, are partnered with Discover, MasterCard and Visa.

:: Visa Wallet, a parallel effort by Visa to partner with its network of member banks to create a branded payments app.

:: Serve, the American Express equivalent of the Visa Wallet effort, which has entered not only into partnerships with Verizon and Sprint but also the fast-growing Foursquare mobile check-in platform.

:: Verisign and the other point-of-purchase equipment companies who make the gizmos used to swipe cards. Verisign has a mobile banking suite that it markets with a variety of tech and banking partners.

In a way, mobile payments already have arrived.

You can flash a barcode on a mobile phone to complete a purchase at most Starbuck’s, but it’s a far more complicated process today than it will be in the future. Now, you have to establish a Starbuck’s account by handing your credit card to a clerk, who loads the funds on a Starbuck’s card. Then, you have to download a Starbuck’s app and link it to your Starbuck’s account. Finally, you have to fuss with the phone when you make a purchase to generate a barcode that can be read at the register. If you run out of money, you have to slap some plastic on the counter to recharge your Starbuck’s card.

In the future, this rigmarole will be unnecessary. Sitting on a bus or walking through the park, you will be able to virtually create and manage accounts with individual merchants, simply waving your phone and confirming a transaction whenever you happen to be in a store. More likely, you will have a generic buying account that works with all merchants. Once established, you will be able to top it up from time to time for use at a gas pump, vending machine or furniture store. You might even be able to wirelessly lend a friend $100.

Paperless banking almost is upon us. Chase has an app that allows you to deposit a check by merely taking a picture of it with your Android or iPhone.

Once the mobile payments ecosystem fully evolves, currency and plastic may well become relics of the past.

For consumers, this will provide greater convenience and arguably more security than ever.

For the winners in the land grab, it will unlock vast new markets, potentially shifting revenues from banks and credit card companies to companies like Google, Apple and the mobile carriers.

For marketers, the systems will capture a wealth of information about purchasing patterns, including who, what, when and where people bought something. Even when this data is collected without identifying individuals by name, the volume and specificity of the information will enable marketers to sharpen their messaging and tactics.

Going to the next level, sites like Blippy.Com encourage consumers to disclose and write reviews about their purchases. If such platforms take off, they will provide merchants with the ability to link specific individuals with particular purchasing patterns, enabling brands to reach consumers with unprecedented precision.

At the level beyond that, it seems entirely possible that a significant number of consumers would be willing to have all their purchases tracked in return for such incentives as discounts or frequent-shopping points that can be redeemed for cash or products in the future. This, of course, would enable the Holy Grail of target marketing: Putting the right offer in front of the right person at the right time.

Although the outlook is unclear, there can be no question that mobile payments will revolutionize marketing by creating an ocean of real-time, granular and precise consumer data.

This matters to publishers and broadcasters, because it means that marketers in the future probably will vector ever more of their advertising dollars into direct connections with consumers, instead of mass media.

As mobile payments combine with the power of digital publishing, masses of eyeballs – which happens to be what traditional publishers and broadcasters sell – will diminish in importance in the typical advertiser’s media mix.

Where does this leave the traditional media companies?

Because rich data – not mass audiences – will be the name of the game in the future, every local media company should be gathering as much data as possible about every household and individual in the community it serves.

The most immediate opportunities to do this are through newsletter programs, contests, site registration and smart mobile apps. Obviously, all of these tactics require close attention to government and corporate privacy policies.

The other thing media companies need to do is pay close attention to the evolution of the mobile payments ecosystem. Then, when the time is right, they need to buddy up with the likely winners.

Wednesday, August 13, 2014

How digital retailing could roil local media

Thanks to the growing ubiquity of mobile devices, a digital revolution is about to transform bricks-and-mortar retailing – a fast-breaking phenomenon that potentially poses the biggest challenge yet to the economics of local media companies.

More than four out of five smartphone and tablet owners use their devices for shopping, according to a report issued earlier this year by the Nielsen marketing metrics service. Nielsen says 65% of consumers research products before they head to a store, 66% of shoppers check prices in stores and 49% of them redeem coupons from their mobile phones.

Given all this click-to-buy-ing, it is perhaps no surprise that mobile-enabled commerce is projected by the eMarketer research service to nearly triple from today’s level to $113.6 billion by 2017. Now, here’s why publishers and other local media companies should worry:

With more shoppers making buying decisions and actual purchases on their mobile devices, local retailers and national brands are bound to vector ever more of their marketing dollars into intercepting consumers on mobile platforms, thus diverting ever greater portions of their budgets away from the traditional print and broadcast media.

Retail advertising, without doubt, is the lifeblood of local media. In 2013, retail advertising accounted for 75% of the $14.5 billion in advertising sold by local television stations, 43% of the $23.5 billion in ads sold by newspapers and 38% of the $4.2 billion in ads sold by local radio. The broadcast information was provided by Kantar Media and newspaper statistics came from the Newspaper Association of America.

The rush to digital retailing dominated a June conference in San Francisco sponsored by Street Fight, a smart online news service covering the myriad ways that prodigiously funded start-up companies are developing high-tech solutions to such pressing problems as C2C (Coffee to Commuter), S2S (Shoes to Shopper) and PP2CP (Pepperoni Pizza to Couch Potato).

Although these commercial goals may seem modest, the technologies, algorithms, analytics and business models developed to solve these problems likely will pave the way to changing how brands target prospects and merchants smooth the myriad frictions associated with driving to the mall, navigating a store, selecting a product, fishing out a credit card and schlepping the purchase home.

“We don’t believe shopping centers are dead,” says Nicholas Cabrera, who researches the future of retailing for Westfield Group, one of the largest mall operators in the world. But Cabrera told the Street Fight audience that technology is poised to “transform” shopping into a more pleasant experience for consumers – and a more productive one for merchants.

Here’s how that will happen:

Using apps, search engines, shopping sites, social media and volunteered information from consumers, everyone in the shopping ecosystem – brands, retailers and even mall operators – will endeavor to learn as much as they can about individual customers. Then, using smartphones, Google Glasses, smartwatches and the like, they will put the right offer in front of the right consumer at the right time, perhaps even adjusting pricing dynamically to recruit desirable new customers.

Websites, social media, shopping portals and search engines already monitor content consumption, conversations, wishlists, shopping carts and buying behavior. They increasingly are combining this information with masses of acquired and derived data to pigeonhole consumers into ever-tighter segments in order to optimize marketing messages to them.

In the interests of capturing real-time information about the intentions and behavior of consumers while they are in stores, a growing array of hardware, software, network and analytics companies intend to track customers via not only signals from their own devices but also with concealed cameras using sophisticated facial-recognition technology to gauge buying intent. Leaving nothing to chance, the newest Android phones can take your pulse to identify the shoes that quicken your heart.

To capture even more data, nearly every major retailer has developed – or soon will launch – an app to help consumers organize their shopping excursions, redeem coupons, make payments and earn loyalty rewards. Walmart’s latest app even issues rebates to customers if it finds a product being sold for less by a competing merchant. Not so incidentally, the apps will help merchants learn tons about customers at the same time.

The retail revolution is nothing short of an arms race to accumulate as much information about individual customers as possible. Local media companies can be major winners in the revolution by developing delightful products that help merchants to capture and leverage customer data. If they fail to act, however, they will be marginalized as advertisers move to interactive marketing.

While local publishers and broadcasters lack the technology to do this by themselves, their market presence and brand power are extremely valuable to the tech companies trying to solve far more than just the PP2CP problem. When potential partners come calling, media companies need to listen. Then, they need to respond as if their lives depended on it.

About Me

Alan D. Mutter is perhaps the only CEO in Silicon Valley who knows how to set type one letter at a time.
Mutter began his career as a newspaper columnist and editor at the Chicago Daily News and later rose to City Editor of the Chicago Sun-Times. In 1984, he became No. 2 editor of the San Francisco Chronicle.
He left the newspaper business in 1988 to join InterMedia Partners, a start-up that became one of the largest cable-TV companies in the U.S.
Mutter was the COO of InterMedia when he moved to Silicon Valley in 1996 to join the first of the three start-up companies he led as CEO.
The companies he headed were a pioneering Internet service provider and two enterprise-software companies.
Mutter now is a consultant specializing in corporate initiatives and new media ventures involving journalism and technology. He ordinarily does not write about clients or subjects that will affect their interests. In the rare event he does, this will be fully disclosed.
Mutter also is on the adjunct faculty of the Graduate School of Journalism at the University of California at Berkeley.